The ongoing debate over health care reform in the United States has expanded from targeted concerns about the millions of Americans without health insurance to broader consideration of gaps in quality, rising health care costs, and the structure of a system that is failing to address either problem. Dramatic variations in spending that bear little correlation to quality, the underuse of care proven to be effective, and the common occurrence of medical errors and other safety problems indicate that our current system neither rewards nor encourages higher-value care. On the contrary, Medicare's current payment system promotes high-volume and high-intensity care regardless of quality, and does not support innovative approaches to coordinating care, preventing avoidable complications, or minimizing the provision of unnecessary services.

Increasing awareness of these problems has resulted in a growing array of public and private sector initiatives to promote efforts by providers to improve care and to foster greater accountability for both quality and cost. Building on the success of recent Medicare pilot programs, the recently passed Patient Protection and Affordable Care Act establishes Accountable Care Organizations (ACOs) as a national program under Medicare that provider groups will be able to join in 2012. Under the program, primary care physicians are encouraged to join together with other providers to take responsibility for the full continuum of their primary care patients’ care. They must commit to reporting comprehensive measures of the quality and -- eventually -- outcomes of care. If they are able to improve quality and thereby reduce costs, they will receive a share of the savings achieved. The term “accountable” is intended to mean just that; ACOs should only receive additional payments to the extent that they are demonstrably improving care for their patients.

The ACO model is well aligned with other new payment and delivery system reforms and should strengthen them. On their own, “medical home” and episode-based payments may help strengthen primary care and improve care coordination, but they do not directly address the problem of supply-driven cost growth highlighted by the Dartmouth Atlas. However, if adopted within a framework of overall accountability for cost and quality as is envisioned in the ACO model, both the medical home and bundled payment reforms would have added incentives to support not only better quality, but also lower overall spending growth.

The Dartmouth Atlas of Health Care is based at The Dartmouth Institute for Health
Policy and Clinical Practice and is supported by a coalition of funders led by the Robert Wood Johnson Foundation,
including the WellPoint Foundation, the United Health Foundation, the California HealthCare Foundation, and the Charles H. Hood Foundation.